Moutai gains on plan to raise liquor prices

Kweichow Moutai Co, China's largest maker of baijiu liquor, posted the biggest gain in almost two years in Shanghai trading after saying it plans to raise prices.

Shares of the liquor maker surged as much as 8.3 percent and closed 6.2 percent higher, the largest percentage gain since Nov 2010. The mainland's benchmark Shanghai Composite Index dropped 0.75 percent.

Moutai, based in Guizhou province, plans to raise factory prices for some of its liquors by 20 percent to 30 percent, the company said after the close of markets on Monday. The liquor maker reported last month a 35 percent increase in first-half sales, trailing a target it set in May of boosting 2012 revenue by 51 percent.

"The price increase shows that the company has the drive to realize the 51 percent growth in annual sales," Ping An Securities Co analysts led by Wen Xian wrote in a note on Tuesday. They rate the shares "strong buy".